I suspect it's, in part, because humidity is low. The fab needs to tightly control humidity and temperature. Pulling water from air is energy intensive. Facilities team in the fab I used to work in said their most energy intensive days where the most humid days.
Motorola put a bunch of their early semiconductor facilities there in the 1950s so there has been a long history of the industry there along with relevant suppliers and trained work force. Microchip Technology, Amkor, Intel, First Solar continued the trend in the 70s/80s so there's a lot of related industry built up over the decades.
Main reasons are a stable geology and climate, access to reliable water via the salt river project that was designated for industrial use, and the historical semiconductor presence that is already in the area. The local universities also have a strong focus on tech.
Arizona seems a particularly bad place to choose freely.
Fabs consume enormous quantities of water and Arizona (and the sw) are already in precarious position, and not even a semi viable theoretical option like desalination possible in the future
A sweeping statement, like plastic is recycled. It is more complex than that.
It is energy intensive (and expensive) to recycle both low purity and ultra pure water (UPW) used and for some fabs it is just 40% [1] and there is no consistent globally adopted solution, most of the tech used is still evolving and not implemented everywhere.
